Thousands of USAA military customers can claim $64.2 million settlement payments – here’s who qualifies
The bank specializing in military customers, USAA, has just agreed to pay $64.2 million to settle a class-action lawsuit alleging that its banks charged erroneous fees and excessively high interest rates, which violated federal protections for military service members.
According to the settlement published a few days ago, defendants USAA Federal Savings Bank and USAA Savings Bank (the company’s credit card subsidiary that is now part of USAA Federal Savings Bank) agreed to pay more than 210,000 member customers to close the case that began in November 2021. Despite this, they did not admit to having committed any irregularity or illegality.
In the lawsuit, four plaintiffs alleged that the banks failed to reduce interest rates and fees pursuant to the Armed Forces Members Civil Relief Act (SCRA), which led to undue inflation of customers’ principal balances and resulted in compound interest calculations based on the higher balances.
“Despite their representations to complaintiffs and other class members, defendants failed to comply with the SCRA and the terms of its USAA Military Benefits Program,” the lawsuit reads.
The Servicemembers Civil Relief Act dates back to 2003 and, in its current wording, is intended to protect troops from financial burdens while serving in the United States Army. This law guarantees to the uniformed officers that they can suspend, postpone, or reduce obligations such as loans, rents, or insurance costs in certain circumstances.
What Does the Lawsuit Against USAA Say?
The lawsuit alleges that during an evaluation in March 2019, the U.S. Department of the Treasury’s Office of the Comptroller of the Currency identified 546 violations of the Members of the Armed Forces Civil Relief Act (SCRA) and 54 violations of the Military Lending Act by the Federal Savings Bank USAA. These violations include the failure to protect reservists from excessive fees and improper recovery of vehicles.
The office issued a cease and desist order, demanding that the bank implement corrective measures for its customers. In addition, in 2020, it fined the bank $85 million for failing to establish or maintain an effective program to monitor compliance with laws and manage information technology-related risk.
In a statement provided to Military.com , Roger Wildermuth, USAA’s director of public relations, expressed that the company “does not agree” with the allegations, but decided to settle the case “in the best interests of our members” and to avoid lengthy and expensive litigation, which would allow them to focus on providing a high-quality service.
According to Wildermuth, before the lawsuit was filed, USAA had already compensated the members for any mistakes that may have occurred in connection with the allegations. He added that “about half of the amount of the announced settlement goes simply to reissue checks that we had previously sent and that our members never cashed.”
Additionally, the lawsuit says such checks were sent by correspondence that “deceptively stated that the recipient ‘may have’ been entitled to ‘benefits and/or protections’” and were printed in a manner that would prompt the recipients to throw them away.
The correspondence was often sent in a nondescript envelope that looked to many military personnel like an application or junk mail, the lawsuit warns later in the text.
How Much Money Does the Plaintiffs Get?
Each plaintiff who files a claim form can get a little more than $200, but the four main plaintiffs — all former members of the Army Reserve or the Army National Guard — will receive an estimated $20,000 each.
Seattle-based law firm Smith & Lowney PLLC and Hagens Berman Sobol Shapiro LLP will receive 27.5% of the settlement, which is just over $17 million.
The rest is for all the plaintiffs. If you want to file a claim and become plaintiffs, you can enter the official website www.USAABankClassAction.com.